Job Openings, A Leading Indicator, Remain In Strong Growth Trend

The job openings data from the BLS JOLTS survey is a little more delayed than other employment data but it has the advantage of being a leading indicator for overall payrolls. Changes in the trend of job openings tend to lead changes in total nonfarm payrolls trends by several months. On this score, the uptrend in jobs does not appear to be in any jeopardy in the months ahead. The JOLTS data also tends to lead the stock market at tops, but not at bottoms. By that score as well, the uptrend since 2009 does not appear to be in jeopardy.

Job Openings Vs. Non Farm Payrolls

Job Openings Vs. Non Farm Payrolls – Click to enlarge


I am concerned only with the not seasonally adjusted data, depicting the trend by showing both a 12 month moving average and the lines connecting the current month each year, as well as the months in which the annual highs and lows typically occur. That gives a much clearer and more accurate picture than seasonal smoothing as it shows both the actual current position of the number within the bigger picture trends. The current level of this series is completely consistent with the trend growth over the past year.

August is virtually always a down month, as hiring slackens in the summer months. On a month to month basis, August was down 288,000. That was better than the August 2011 drop of 426,000, but worse than the prior 10 year average of a drop of 249,000. The 10 year average was skewed by an atypical gain in August 2006 at the peak of the housing bubble.

The current data shows a year to year gain of  12.7%. This was better than the July year over year gain of 7.4%, but less than the average gain for the past year of 16.2%. Current levels are back to 2004 levels when the economy was beginning the last leg of the housing bubble. From then through the first half of 2007 the numbers included millions of fake jobs created by the bubble.

Job Openings and Labor Turnover (JOLTS) - Click to enlarge

Job Openings and Labor Turnover (JOLTS) – Click to enlarge

Like so many other data series in this class, this “recovery” is still just a cyclical bounce in a secular downtrend until proven otherwise. Likewise, many of the openings are in low paying service jobs, or in specialized fields for which most Americans lack the qualifications.  The fact that there are millions of job openings is not going to reverse the immense hardships facing unemployed and underemployed Americans. Nor will it reverse the decline in Americans’ standard of living.  But in terms of a correlate for the direction of stock prices,  there’s no sign of a rollover or any real slowing of growth in this data. But as with any comparison of this nature, there’s no guarantee that an indicator that led the last turn will lead the next one.

Job Openings and Stock Prices

Job Openings and Stock Prices – Click to enlarge

Here’s the full government report. The BLS also publishes a series of interesting charts.

For more charts and additional analysis, visit the permanent Employment Charts page, updated whenever new data becomes available. You can bookmark that page for future reference. 

More Economic Charts

Follow my comments on the markets and economy in real time @Lee_Adler on Twitter!

Stay up to date with the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, along with regular updates of the US housing market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Try it risk free for 30 days. Don’t miss another day. Get the research and analysis you need to understand these critical forces. Be prepared. Stay ahead of the herd. Click this link and begin your risk free trial NOW!

Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also provide analysis and charts for David Stockman's Contra Corner which I developed for Mr. Stockman. I’ve had a wide variety of finance related jobs in the past 44 years, including a stint on Wall Street in both analytical and sales capacities. Prior to starting the Wall Street Examiner I worked as a commercial real estate appraiser in Florida for 15 years. I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. My perspective is not of the Ivory Tower. It is from having my boots on the ground and in the trenches of the industries that I analyze and write about today. 

Leave a Reply